If government is looking to reduce compliance costs for small business and give e-commerce a boost, instituting a "single business number" is an obvious step to take, says a staunch supporter of the idea.

The single business number (SBN) is a common identifier for a businesses which could be used in all dealings with government departments and e-commerce.

For example at present the IRD, ACC and other government departments do not automatically recognise businesses on the companies register as the same business. Adopting an SBN would change this allowing information sharing between agencies and reducing compliance costs for business.

But CEO of leading cloud accounting company Xero, Rod Drury says adopting an SBN system would also be a huge boost for e-commerce.

"It would basically be a big accelerator to trust. It's the key to identifying businesses electronically," Drury says. It would accelerate cloud computing by allowing business to send trade documents electronically.

It would also reduce compliance by allowing companies to file government required records and information online. It will improve cashflow and networking between businesses, Drury says.

"It's not that the system is broken at the moment but if the government is looking for ways to reduce compliance costs for business this is a tangible thing they can do."

In August Economic Development Minister Steven Joyce and Internal Affairs Minister Chris Tremain announced their support for the Single Business Number and since then the Ministry of Business, Innovation and Employment has been developing a business case for the initiative.

One of the biggest roadblocks is determining which businesses will be eligible for an SBN – just those on the companies register or all businesses.

"The problem is the companies register doesn't include sole traders. And in New Zealand you are often dealing with sole traders," says Drury.

There are also some privacy issues with regard to sole traders as the Privacy Act does not allow for unique identifiers given to an individual to be passed to another agency.

MBIE spokesman Britton Broun says as part of preparing the SBN case the ministry is investigating the privacy implications for sole traders as well as talking to other government agencies and businesses on the benefits and implications of an SBN.

According to Drury one of the other issues to resolve is the number itself. There had been talk of simply using companies' existing GST numbers but that has also prompted some privacy concerns.